Transition, Effective Date and Due Process (Agenda Paper 26)

Background

In September 2017, the Board published ED/2017/5 Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8). Please see our IFRS in Focus on the ED for the proposed changes.

The summary for the agenda paper issued in October 2019 and the Board discussion is covered here.

Staff analysis and recommendation

Transition requirements

The ED set out proposed transition requirements. Only a few respondents commented on the proposed transition requirements.

The staff continue to agree with the proposed transition requirements for the reasons considered by the Board when developing those requirements as the expected benefits of applying the amendments to changes that occurred in prior periods would not outweigh the cost. The Staff also clarified that the amendments would clarify only whether a change is a change in accounting policy or a change in accounting estimate—they would not change the requirements in IAS 8 on accounting for those changes. Accordingly, an entity would then continue to apply the existing requirements in IAS 8 to determine whether to account for such a change prospectively or retrospectively.

Effective date

The staff mentioned that the amendments are narrow in scope and apply only to changes in accounting policies and changes in accounting estimates that occur after the start of the first annual period in which the entity applies the amendments and considered that the entities and jurisdictions would have sufficient time to apply and incorporate the amendments if the Board were to set an effective date of 1 January 2022—i.e. approximately 18 months after the end of the first half of 2020. Accordingly, staff recommended that the Board require entities to apply the amendments for annual periods beginning on or after 1 January 2022.

Due process steps and permission for balloting

The Board has previously tentatively decided not to re-expose the amendments to IAS 8.

The staff considered that the Board has undertaken all the due process activities identified as being required in the Due Process Handbook and, thus, is able to finalise the amendments.  Therefore, the Staff requested permission to start the balloting process. The staff expect that the Board can issue the amendments in the first half of 2020.

Board discussion

One Board member suggested to align the effective date for the three projects the Board currently has on IAS 8.

Board decision

All of the Board members agreed with the staff recommendations and gave the staff permission to begin the balloting process. No Board member indicated an intent of dissenting to the amendment.